ASIC’s FSCP lacks consumer voice

The corporate regulator’s proposal for the Financial Services and Credit Panel (FSCP) is not ideal as there are only industry participants and no consumer voice, according to Maurice Blackburn.

In its submission to the Better Advice Bill the law firm said having only industry participants would mean the system effectively only had industry figures judging the behaviours of other industry figures.

The submission pointed to the proposal that said the list of eligible persons on the panel could include representatives from the financial services industry such as financial advisers and financial services licensees, as well as people with experience in other fields, such as law, economics, accounting and tax.

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The proposal said: “To be appointed to the list, the Minister must be satisfied that the person has experience or knowledge in at least one of the following fields:

  • Business;
  • Administration of companies;
  • Financial markets;
  • Financial products and financial services;
  • Law;
  • Economics;
  • Accounting;
  • Taxation; or
  • Credit activities and credit services.”

“We believe this list of eligible persons would be enhanced by having the consumer voice represented,” Maurice Blackburn said.

“It would be difficult for consumers (including victims of poor corporate behaviours) to have confidence in a system where their voice is not imbedded in the decision making process.

“We believe a simple adjustment could be made to the draft materials, to the effect that consumer voice such as from an appropriately qualified consumer representative (for example an employee of the Consumer Action Legal Centre, Financial Rights Legal Centre or Public Interest Advocacy Centre) is always required during these panel hearings.”

The law firm said the Australian Securities and Investments Commission’s (ASIC’s) draft panel model might not earn consumer confidence.

“Aside from the lack of consumer voice in the process as described above, consumers would be right to be dubious about who is assessing the behaviours of financial advisors against agreed standards – especially if those assessors are drawn from within the industry,” the submission said.

It also recommended that conflicts of interest in the draft only related to the chair and that conflict of interest provisions needed to be applied to all panel members.

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Maybe Maurice Blackburn should have a read of Section 150 of the ASIC Act that very clearly applies conflict of interest obligations on the industry members of the panel. Section 150(4) excludes them from being part of any decision where they have a conflict. Section 142 of the ASIC Act also requires a full disclosure of all conflicts. Maybe a full read of the Bill would be the first step. As for the obsession with consumer reps, if they do not have the knowledge and have never gone through the advice process, then surely they are not qualified to judge breaches of the law and misconduct.

I'm surprised they didn't recommend an ethicist or a specialist in the law of equity, particularly in the area of fiduciary law, which is what breaches of the FASEA Code will be largely assessed against. I don't see how a consumer advocate would help. We already have a truck load of ambulance chasing law firms and some very active consumer advocacy groups (including AFCA) feeding off the royal commission driven turkey shoot.

Perhaps they have learnt their lesson with "ethicists" from the FASEA debacle, where an ethics course provider was able to abuse government power to force advisers to purchase lots and lots of ethics courses.

Absolutely... ambulance chasers also have a conflict of interest because their income depends upon it. Maurice Blackburn and others should not get a seat. :P

Consumers have been very poorly served in recent years by the interference of so called "consumer representatives", who haven't represented genuine consumer interests at all. Unfortunately consumer associations have become a meal ticket for spivs and zealots. Like it or not, consumer interests are most accurately represented by members of parliament who are ultimately elected by those consumers. Not by sham "consumer associations".

And I bet Maurice Blackburn would promote the idea that non-lawyers should sit in judgement on the Legal Ethics Panel, or the Legal Disciplinary Committee or any other legal panel?

Apply the same standard to the law society and then we’ll talk.

Well said. Add the AMA and CA and CPA and wvery other professional body to the list.

We had "consumer representatives" on the FASEA Board, and look at what resulted: an inoperable Code of Ethics that still hasn't been sorted and an exam that has received so much criticism and resulted in more changes to address the issues arising out of its rollout. And we know the "consumer representatives" are a conflicted mob. Finally, Maurice Blackburn isn't exactly the guiding light on ethical behaviour. Just look at the millions they rake in at the expense of the very people they purport to represent in class actions.

Maybe in this case, we'll have some people who at least understand what is in the best interests of the client.

I personally think the legal profession has shown pretty convincingly how capable they are at f*cking up financial services, not to warrant them getting a seat... and in particular, we don't need ambulance chasers on a consumer board representing (supposedly) consumers, using it to feather their own nest.

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